7. New Communities

To induce the private provision of public goods, we have to collect the goodwill of many people; as such, we need people with leadership skills. Such a leadership is a kind of public good. The discussion in Remark 6.​3 may be useful in finding someone who can provide such public goods.

Commercial companies, which seek profits, can be viewed as a community if we consider the network of workers and managers in them. Unlike traditional communities, such a network may be viewed as an association of people bound by strong wills. However, in this book, by defining communities as networks of people who are not motivated to seek profits, we have excluded commercial companies from our list of communities. This is because with a clear goal of seeking profits, the network of people is usually well defined and disciplined in legal contracts. They can avoid most of the problems that “communities,” by our definition, face. However, the legal contracts are not complete, and the commercial companies sometimes encounter free rider problems and seek profits as well as welfare of the workers and the society by providing some public goods. In particular, according to the traditional thinking of managers in Japanese companies, there is an idea that a company should be managed as if it is a family, that is, a traditional community. Even in the period of high economic growth, managers of Japanese companies have tried treating their workers as family members. It may be one of the reasons why the long-term employment and seniority system have been adopted by them. It is understandable to some extent because the system of contracts has not been well-regarded. It has rather been considered as a kind of guideline, partially because the Japanese society has not for a long time in its history, been a contract-based society, but a relation-based one. However, presently, in modern Japan, the system of contracts has been given greater regard, which is rapidly changing the nature of Japanese companies. The analysis of Japanese companies may provide some insights into the function and structure of communities, which this book is interested. However, such analyses are beyond the scope of this book.

“Among democratic nations, on the contrary, all citizens are independent and feeble; they can do hardly anything by themselves, and none of them can oblige his fellow men to lend him their assistance. They all, therefore, become powerless if they do not learn voluntarily to help one another (Tocqueville 1840; Volume II, Chap. V)”.

“Associations” in America, which we call new communities, seem to have been shrinking as Putnam (1995) argued. The fact suggests that, just like traditional communities, new communities can be easily weakening (c.f. Remark 7.3). New communities, which can be described as the social capital, especially fragile because boundaries of such communities cannot be clearly defined (c.f. analysis in Sect. 7.3.3).

For studies on NPOs in economics, see Glaeser (2003) and Anheier and Ben-Ner (2003).

These corporations have been set up and operated to support various government activities.

See the report (http://​www.​ccss.​jhu.​edu/​pdfs/​CNP/​CNP_​table401.​pdf).

Examples of such perquisites may include houses, cars with drivers, parties, and overseas travels, which can be accounted for as necessary costs of the organization. In some NPOs, the perquisite may take the form of shorter working hours and longer vacations with respect to the high wages offered to managers, which can be observed in many “public-benefit corporations” where government bureaucrats often work after their retirement.

See the proof of Proposition 4 of Glaeser-Shleifer (2001) for more details.

It has been pointed out that the use of “social capital” goes back at least to Hanifan (1916). It has been intensively used and developed after the seminal works by Coleman (1988, 1990), Putnam et al. (1993) and Putnam (1995, 2000).

The definition is slightly different from the one given by Putnam et al. (1993, p. 167), who played an important role in clarifying the importance and usefulness of the concept of social capital. He defined it as “features of social organization, such as trust, norms and networks, that can improve the efficiency of society by facilitating coordinated actions (Putnam et al. 1993, p. 167)”. Strictly speaking, the definition is slightly different from the one given in OECD (2001), but their implications are not very different. By defining social capital as a network with certain properties, we can quantify it to some extent, which is one of the reasons why we adopt the definition given by OECD (2001).

Some concerns regarding the network as the “capital” have been expressed by some economists (e.g., Arrow 2000; Solow 2000). As the models below suggest, we can conduct an interesting economic analysis by regarding it as the capital. Although it is important to pay attention to the criticism against such use, we believe that viewing the network of people as the capital of our society is a useful way of understanding our society.

According to Halpern (2005, pp. 19–22), this classification was said to originate in Gittell and Vidal (1998).

We may be able to associate such a bonding-type network with what Toennies (1887) called the “gemeinschaft.” See, for example, Brint (2001) concerning the classification of communities and related sociological studies on them.

See Halpern (2005, p. 45).

In Japan, Brinton (2000) points out that schools and universities have their social capital, that is the network of the alumni and people who help students find jobs. Existence of such a social capital may explain harsh competition to pass the entrance examinations for good schools and universities with rich social capital.

The study also indicates that the medical cost for the elderly is lower, per capita, in prefectures with high ratio of the working elderly.

See Halpern (2005, Chap. 5).

This statement corresponds to the following sentence by Durkeheim (1897, p. 209): “suicide varies inversely with the degree of integration of the social groups of which the individual forms a part.”

Based on a questionnaire survey, Pargal et al. (2000) explained that the residents of some areas in the capital city of Bangladesh cooperate in improving garbage collection more than the residents in other areas because of the higher social capital in the former. The results also suggest that the higher social capital can be a factor that encourages people to provide public goods.

The concept of social capital is often criticized because it is difficult to quantify accurately. From the perspective of scientific analysis, the difficulty of proposing testable hypotheses about effects of social capital, for example, can be seen as a critical defect of the concept. However, there have been many attempts to quantify the social capital and test various hypotheses. For example, Knack and Keefer (1997) constructed an index of social capital based on various indexes for social and economic conditions, and used it to test whether social capital has some effect on economic performances. See Sect. 7.3.2.1 above for more discussion.

For example, we can think of \(S_t\) as the number of people with whom he/she shares norms, values, and understanding.

\(\alpha \) is equal to \({\partial S \over \partial \hat{S}}\) in the Eq. (7.4). The multiplier effect is larger as \(\alpha \) is close to 1, that is, as the effect of \(\hat{S}\) on S is larger.

Based on a theoretical model, Apinunmahakul and Devlin (2008) suggest that an increase in the public provision of public goods such as community centers, playgrounds, and libraries can encourage the accumulation of social capital and the private provision of public goods.

In the discussion of communities in modern society, we cannot ignore the so-called cyber-communities and social networks. The analyses on such communities (e.g., Christakis and Fowler 2009), are increasing. The scale, scope, depth, and rate of growth of such communities are incomparable to that of any other type of community. They must have a deep impact on our society. We need not deepen our analysis and discussion on these communities now, but we leave them for future studies.